progress in ultrasound 2005 - philips
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Progress in Ultrasound 2005
Barbara Franciose
Analysts’ Meeting June 15th, 2005
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2Philips Medical Systems
UltrasoundA Flagship Modality for Philips Medical Systems
• Ultrasound is highly innovative with great imaging ability (advanced)
• Exam has unequalled patient intimacy and interaction (easy to use and designed around you)
• Ultrasound’s flexibility, mobility and relatively low cost help fuel continued growth
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3Philips Medical Systems
Ultrasound at Philips Medical
• Ultrasound Market and Growth
• Innovation in Products
• Operational Excellence and Cost Reductions
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4Philips Medical Systems
Economy
Mid-Range
High-End
Premium
Total €3,000 M
€ 750M
€ 825M
€ 690M
€ 735M
> €100K
€60K - €100K
€30K - €60K
< €30K
Hearts andVessels Combination General
Body OB/Gyn and Other
2005 Ultrasound Market SegmentationEquipment Revenue (€M projected)
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5Philips Medical Systems
Economy
Mid-Range
High-End
Premium
€750M
Cardiology Market Growing Due to New Live 3D
Total €3,000 M
€ 750M
€ 825M
€ 690M
€ 735M
> €100K
€60K - €100K
€30K - €60K
< €30K
Hearts andVessels
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6Philips Medical Systems
Economy
Mid-Range
High-End
Premium
€730M
Radiology Requires Premium Technologies
Total €3,000 M
€ 750M
€ 825M
€ 690M
€ 735M
> €100K
€60K - €100K
€30K - €60K
< €30K
GeneralBody
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7Philips Medical Systems
Economy
Mid-Range
High-End
Premium
€630M
OB / Gyn Grows Mostly in the Low-end
Total €3,000 M
€ 750M
€ 825M
€ 690M
€ 735M
> €100K
€60K - €100K
€30K - €60K
< €30K
OB/Gyn and Other
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8Philips Medical Systems
Economy
Mid-Range
High-End
Premium
€790M€790M
Combination Ultrasound Still Important and growing in Europe, Asia and Private offices
Total €3,000 M
€ 750M
€ 825M
€ 690M
€ 735M
> €100K
€60K - €100K
€30K - €60K
< €30K
Combination
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9Philips Medical Systems
2005 Ultrasound Market SegmentationEquipment Revenue + Service Revenue (€M projected)
• Inclusion of Service increases 2005 projected market total revenue from €3,000M to €3,600 M
• Service continues to be more profitable than new equipment and insures annuity stream
+ Service
Equipment
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10Philips Medical Systems
0
500
1000
1500
2000
2500
3000
3500
4000
20082004 2005 2006 2007
(€M
)Total Ultrasound Equipment Market grows 4-5% CAGR, 2004 to 2008
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11Philips Medical Systems
27%
Q1 2005 vs. Q1 2004Comparable Growth of Orders
3pts
Market Share Growth Q1 2005
HighestIn
6 Qtrs
Q1 2005 Orders On Hand
Order Growth
significant YTD
And we are Growing Faster than the Market!
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12Philips Medical Systems
USA Growth Trending Up Significantly(new Premium Cardiac and GI products)
41%
Q1 2005 vs. Q1 2004Comparable Order Growth
8%
Q1 2005 vs. Q1 2004 Comparable Sales Growth
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13Philips Medical Systems
Asian Pacific Advancing As Well
24%
Q1 2005 vs. Q1 2004Comparable Order Growth
12%
Q1 2005 vs. Q1 2004 Comparable Sales Growth
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14Philips Medical Systems
What are the Unique Drivers of Philips Ultrasound’s Market Success?
• New Products which give increased diagnostic confidence
• Unmatched ergonomics toreduce the cost of Work Related Musculoskeletal Injuries
• Cutting-edge clinical applications: – QLAB quantification onboard– Breast lesion detection
Four new products
Since March 2004
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15Philips Medical Systems 3
Ultrasound at Philips Medical
• Ultrasound Market and Growth
• Innovation in Products
• Operational Excellence and Cost Reductions
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16Philips Medical Systems
2%
26%
43% (53%)
70% (66%)
2002 2003 2004 2005FCNew product = a product based on a new hardware platform or a product
with a significant increase in functionality, or cost-per-function improvement
(value)from 2004
AnalystPresentation
Ultrasound New Product Revenues% Revenues based on products < 2 yrs old
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17Philips Medical Systems
New technology for
every price segment
The New Philips Ultrasound Family
• Excellent image quality
• Enhancing productivity through automation and ease of use
• Addressing the high costs of work-related repetitive motion injuries through ergonomic design
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18Philips Medical Systems
iU22 – Gaining Share in the €335M Premium, General Imaging Market
• Image quality stand out
• Advanced automation, ease of use and voice activation
• Well-differentiated by strong ergonomics, flat panel display and connectivity
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19Philips Medical Systems
iE33 – the Only Echo System with Live 3D and Onboard Quantification
• Live 3D and Quantification– the Holy Grail of Echo
• Connectivity to Xcelera (MIT) for complete solutions
• Historic HP/Agilent echo customers and market share is returning
New!
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20Philips Medical Systems
Ultrasound Impacts People –the Story of Jasper Brown and the iE33
• TV story picked up by over 25 media markets, including 8 of top 25 in US
• Over 3 Million viewers
• Featured on CBS “Early Show”
• Powerful testimonial by Dr. Roberto Lang
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21Philips Medical Systems
HD11 – Designed to Target the €790M, Combination Unit Market
• Designed from the ground upto fully meet the needs of this market segment
• Cost-effective, small footprint reliable workhorse with 21 different transducer options
• Robust product with competitive cardiac features, automation and versatility
New!
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22Philips Medical Systems
HD3 – Entering the €640M Low End Market
• First Philips product in this segment in ten years –important part of our strategic growth plan
• Significant market demand in Europe, Asia and Latin America
• Compact, user-installed system
New in Fall ‘05!
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23Philips Medical Systems
Ultrasound at Philips Medical
• Ultrasound Market and Growth
• Innovation in Products
• Operational Excellence and Cost Reductions
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24Philips Medical Systems
Operational Advances
• Divestment of PCB facility in Dec. 2004
• Major consolidation of transducer operations and industrial footprint
• New development and supply chain processes, JV with Neusoft in China, strategic alliances
Less cost of Operation
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25Philips Medical Systems
Expanding OEM and JV Partnering
• Shared costs and expanded sales channels keep us more competitive
• China JV manufacturing and R&D provides cost advantage and innovation
• Partnering with leading edge contrast and technology companies for “next steps”
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26Philips Medical Systems
Compressed intoTransducer Housing
Electronics neededfor image formation
Still Continue to Miniaturize and Cost Reduce our Product Electronics
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27Philips Medical Systems
Ultrasound Financial Metrics Still Improving
• Net Working Capital reduced –60% improvement in turnover in 2004
• Equipment Gross Margin % improves 2 pts in 2004
• Operating expense as % of Sales reduces 4 pts. in 2004
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28Philips Medical Systems
Philips Ultrasound is …
• Gaining share and improving profitability in a growing market
• Providing the triple impact image quality, automationand ergonomics into new market segments
• Will win…with continued momentum and endless energy
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